The Mechanism & Impact of Sanctions on Global Production Networks (GPNs), Case Study: Iran’s Oil Industry

Abstract

This thesis examines the resilience of Global Production Networks (GPNs) amidst international sanctions, with a specific focus on Iran’s oil industry. As sanctions are increasingly used as a political tool, it becomes crucial to study their impact. This study investigates how these sanctions affect the dynamics inside GPNs, particularly in how they modify investment flows, trading patterns, and network function. To facilitate this analysis, we have developed and adapted terminologies that could be used in conjunction with GPNs to analyze sanctions and their impacts. The study specifically examines the sanctions on Iran’s oil industry to understand their impact on GPNs. This thesis uses a critical realism approach, integrating quantitative and qualitative data from various sources. This study demonstrates that, despite the early disturbances brought about by sanctions, GPNs have an impressive capacity to attain equilibrium, which states the balance GPNs achieve after adapting to disruptions. Also, how oil GPNs were impacted and how actors utilized their power dynamics to respond to sanctions have been studied. Furthermore, the study delves into the role of sanction busters in participating in trade with sanctioned countries. The unintended impacts that refer to the consequences of sanctions are also discussed.